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re: Minimum Amount Needed to Put Down on Home Purchase
Posted on 12/27/12 at 8:38 pm to Delacroix
Posted on 12/27/12 at 8:38 pm to Delacroix
quote:
ETA: The only time you should every pay off anything quickly is if you plan on keeping it your whole life or it is an item that depreciates (like a car)
I disagree. Anytime you can pay a lesser price for something that's always a smart move.
$200,000 loan at 4% over 30 years will cost $343,000.
quote:
Put down as little as you can and spend as little of your own money as you can.
No, you're paying an extra $143,000 to borrow $200,000. Spending 171% of the purchase price to pay less today so you can to spend more tomorrow.
Now, take that same $200k over 15 years and you end up spending $266k, saving yourself $77k in the process, in addition to the equity that you've paid into the house.
4
Posted on 12/28/12 at 3:59 pm to mytigger
quote:
mytigger
1. Don't you need to covert all of those payments over 30 years back to present value which makes it much less than $143k?
2. What if you can invest in something that pays 7% interest? Wouldn't that be 3% better than paying your house off early?
Posted on 12/28/12 at 8:31 pm to mytigger
quote:
I disagree. Anytime you can pay a lesser price for something that's always a smart move.
$200,000 loan at 4% over 30 years will cost $343,000.
quote:
Put down as little as you can and spend as little of your own money as you can.
No, you're paying an extra $143,000 to borrow $200,000. Spending 171% of the purchase price to pay less today so you can to spend more tomorrow.
Now, take that same $200k over 15 years and you end up spending $266k, saving yourself $77k in the process, in addition to the equity that you've paid into the house.
That is under the assumption that inflation stays under 4%. If inflation hits 4% (which is likely) then having a long term loan like 30 years is pretty sweet because you really aren't losing money assuming you bought something that appreciates in value along with inflation
Posted on 12/29/12 at 3:12 am to mytigger
Couldn't agree more. Read into Dave Ramsey's money management philosophies. Some concepts may seem foreign to many people I.e. living free of consumer debt (cars, credit cards, student loans). Don't let the current mortgage rates pressure you into buying something you cannot afford because there is a low interest rate. But if you buy a house 20-25% down on a 15 yr fixed with the payments not exceeding 1/4 of your take home pay.
Posted on 12/31/12 at 2:59 pm to mytigger
quote:
I disagree. Anytime you can pay a lesser price for something that's always a smart move.
$200,000 loan at 4% over 30 years will cost $343,000.
I think you misunderstood my point. I was saying that if you're only going to buy a house and live init for 5 years, then you should pay the absolute minimum. Including down payment. If you're going to own a house forever, then it makes sense to pay it off early
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